The Revenue Department’s director-general, Prasong Poontaneat, expects the annual tax growth rate to triple once a new e-business tax commences. The e-business tax will be a levy on any online transaction, regardless of where the operator is located.
Currently, overall tax revenue has increased year-on-year by about five per cent per year, but this figure is expected to jump to 15 per cent once the e-business tax is fully in force. The director general has a revenue target of 1.93 trillion baht this year. A target of 2 trillion baht is set for the 2019 budget. The Revenue Department slightly missed its targets in previous years with a shortfall of around 70 billion baht. (0.07 Trillion baht)
Website operators who have a Thai domain name and who accept payments in Thai Baht will be subject to the new e-business tax. Those website operators who earn a passive income from advertising will be required to put aside an amount in the form of a withholding tax and remit this to the Revenue Department.
The initial rate ceiling of the withholding tax is to be set at 15 per cent but the rate will vary depending on what various websites offer and how their incoming revenue is gained. As well, overseas website operators who sell into Thailand will need to register for VAT if their annual sales exceed 1.8 million baht. With VAT in mind, the new e-business tax will remove the VAT exemption for goods bought online from an overseas vendor that are worth less than 1500 baht.
The draft bill has already been submitted and will be subject to a second hearing by the Revenue Department later this month before a proposal for cabinet approval gets underway. A measure of public opinion about the tax is also to be taken as part of the second hearing.
The e-business tax system is likely to be very efficient and streamlined, as the department will be alerted to every transaction on line automatically.
As part of the e-business tax system implementation, the Revenue Department expects to spend some 2.3 billion baht on a data collection and data analytics system.
Other measures to increase tax revenue, aside from the e-business tax, are the expectations that investment in the Eastern Economic Corridor (EEC) will generate tax revenue as goods and services start to roll out from the region.
Revenue from the construction sector is expected to be the forerunner as construction of industrial parks, housing and transportation hubs takes place. The EEC will also generate tax revenues as a boost of exports of farm produce and oil products takes place, both of which are seeing rising prices of late.